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“Paradise” for the Super Rich

THE revelations contained in the Paradise Papers based on investigation by the International Consortium of Investigative Journalists has thrown further light on how an intricate network of tax havens, opaque companies and financial dealings have developed to service the needs of multinational corporations and international finance capital.

The Paradise Papers are based on leaked financial records from two companies – Appleby in Bermuda and Asiaciti in Singapore and scrutiny of company registers of 19 tax havens around the world comprising 13.4 million documents. Earlier, 18 months ago, the Panama Papers had revealed the dealings of one company based in Panama. The Paradise Papers have provided a close look at how the super-rich of the world shift money to tax havens to avoid paying taxes in their own country. It has focused on how MNCs and corporates put away profit in these tax shelters by setting up subsidiary companies there.

This is not an aberration from how finance capital operates. It is an inherent part of globalised finance capital. A report in September this year, co-authorised by economist Gabriel Zucman estimated that 10 per cent of global GDP, ie, 7.8 trillion dollars is held offshore. According to Zucman, 600 billion Euros of MNC profit were shifted to offshore havens in the last year alone.

The super-rich and big corporates evade paying taxes in this manner depriving the countries of tax revenue which goes towards schools, hospitals and social welfare for its citizens. That this is legally permissible does not make it less ugly and exposes the double standards of neoliberal capitalism, tax avoidance for the rich while the citizens who barely earn a minimum wage have to pay taxes.

The Paradise Papers have thrown up the names of 714 of Indian entities and individuals who have resorted to the use of these two financial companies to set up companies and park funds in them in tax havens. The list includes many Indian big companies, business men and real estate dealers. Some of them belong to the BJP.

The Paradise Papers, like the Panama Papers earlier, effectively debunks the myth of theModi government’s fight against black money. The expose came two days before November 8, which marked the completion of one year of the demonetisation. It has underlined the absurdity of the claim that demonetisation has neutralised black money. The generation of black money, the conversion of it into assets abroad, money lending and round-tripping – are all revealed by the Paradise Papers. The fact is demonetisation has not made even an iota of difference to this process which goes on unhindered.

The Modi government has announced that the multi-agency group set up to look in to the Panama Papers ‘list of entities’ will also probe into the details of Indian entities provided by the Paradise Papers. What this means is that some of the income not disclosed by those in the list will be subject to taxes and penalties. Nothing more. The structure of setting up companies in the tax havens, shifting funds to them and money laundering of black money will not be investigated, or, questioned. Doing so would mean having to challenge financial investors and the very structure of predatory finance capital.

What is needed are strong measures to prevent use of tax havens which are now allowed as legitimate business activity. Suitable laws and a regulatory framework have to be put in place to penalise offenders and plug all loopholes by which tax evasion is made possible. Confiscation of assets of those found guilty will act as a deterrent. To expect the Modi government, however, to do all this would be naive. This is a government at the service of corporate and international capital.